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Abstract

Background

One of the key functions of health insurance is to provide financial protection against
high costs of health care, yet evidence of such protection from developing countries
has been inconsistent. The current study uses the case of Ghana to contribute to the
evidence pool about insurance's financial protection effects. It evaluates the impact
of the country's National Health Insurance Scheme on households' out-of-pocket spending
and catastrophic health expenditure.

Methods

We use data from a household survey conducted in two rural districts, Nkoranza and
Offinso, in 2007, two years after the initiation of the Ghana National Health Insurance
Scheme. To address the skewness of health expenditure data, the absolute amount of
out-of-pocket spending is estimated using a two-part model. We also conduct a probit
estimate of the likelihood of catastrophic health expenditures, defined at different
thresholds relative to household income and non-food consumption expenditure. The
analysis controls for chronic and self-assessed health conditions, which typically
drive adverse selection in insurance.

Results

At the time of the survey, insurance coverage was 35 percent. Although the benefit
package of insurance is generous, insured people still incurred out-of-pocket payment
for care from informal sources and for uncovered drugs and tests at health facilities.
Nevertheless, they paid significantly less than the uninsured. Insurance has been
shown to have a protective effect against the financial burden of health care, reducing
significantly the likelihood of incurring catastrophic payment. The effect is particularly
remarkable among the poorest quintile of the sample.

Conclusions

Findings from this study confirm the positive financial protection effect of health
insurance in Ghana. The effect is stronger among the poor group than among general
population. The results are encouraging for many low income countries who are considering
a similar policy to expand social health insurance. Ghana's experience also shows
that instituting insurance by itself is not adequate to remove fully the out-of-pocket
payment for health. Further works are needed to address the supply side's incentives
and quality of care, so that the insured can enjoy the full benefits of insurance.

Health policy makers have long been concerned with protecting people from the possibility that ill health will lead to catastrophic financial payments and subsequent impoverishment. Yet catastrophic expenditure is not rare. We investigated the extent of catastrophic health expenditure as a first step to developing appropriate policy responses. We used a cross-country analysis design. Data from household surveys in 59 countries were used to explore, by regression analysis, variables associated with catastrophic health expenditure. We defined expenditure as being catastrophic if a household's financial contributions to the health system exceed 40% of income remaining after subsistence needs have been met. The proportion of households facing catastrophic payments from out-of-pocket health expenses varied widely between countries. Catastrophic spending rates were highest in some countries in transition, and in certain Latin American countries. Three key preconditions for catastrophic payments were identified: the availability of health services requiring payment, low capacity to pay, and the lack of prepayment or health insurance. People, particularly in poor households, can be protected from catastrophic health expenditures by reducing a health system's reliance on out-of-pocket payments and providing more financial risk protection. Increase in the availability of health services is critical to improving health in poor countries, but this approach could raise the proportion of households facing catastrophic expenditure; risk protection policies would be especially important in this situation.

This paper presents and compares two threshold approaches to measuring the fairness of health care payments, one requiring that payments do not exceed a pre-specified proportion of pre-payment income, the other that they do not drive households into poverty. We develop indices for 'catastrophe' that capture the intensity of catastrophe as well as its incidence and also allow the analyst to capture the degree to which catastrophic payments occur disproportionately among poor households. Measures of poverty impact capturing both intensity and incidence are also developed. The arguments and methods are empirically illustrated with data on out-of-pocket payments from Vietnam in 1993 and 1998. This is not an uninteresting application given that 80% of health spending in that country was paid out-of-pocket in 1998. We find that the incidence and intensity of 'catastrophic' payments - both in terms of pre-payment income as well as ability to pay - were reduced between 1993 and 1998, and that both incidence and intensity of 'catastrophe' became less concentrated among the poor. We also find that the incidence and intensity of the poverty impact of out-of-pocket payments diminished over the period in question. Finally, we find that the poverty impact of out-of-pocket payments is primarily due to poor people becoming even poorer rather than the non-poor being made poor, and that it was not expenses associated with inpatient care that increased poverty but rather non-hospital expenditures. Copyright 2003 John Wiley & Sons, Ltd.

In 2003, China launched a heavily subsidized voluntary health insurance program for rural residents. We combine differences-in-differences with matching methods to obtain impact estimates, using data collected from program administrators, health facilities and households. The scheme has increased outpatient and inpatient utilization, and has reduced the cost of deliveries. But it has not reduced out-of-pocket expenses per outpatient visit or inpatient spell. Out-of-pocket payments overall have not been reduced. We find heterogeneity across income groups and implementing counties. The program has increased ownership of expensive equipment among central township health centers but has had no impact on cost per case.

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